Rent or Buy after 50? That's a Very Good Question

July 28, 2017 • Barbara Ballinger & Margaret Crane

The desire to own fewer things in our lives can be seen with the current decline in luxury spending or spending in general, and the cult success of listening to the decluttering superstar author Marie Kondo. Whether we buy fewer possessions or just bid thanks and adieu to things we already own that fail to spark continued joy in our lives, all signs point to the fact that for many of us aged 50 plus, it’s time to move on--and with far fewer things.

As we shed our stuff after each of us lost our spouses, both of us had to decide what to do with our too-large homes, plus decide where to live, and whether to buy again or rent, and let someone else take care of and own the property. Renting seemed so easy and a nice return to what we did when first married and life was far simpler. Then, we each saved up and then owned. We redecorated to our taste, added on, changed flooring, moved walls. Barbara remodeled three kitchens. We got remodeling out of our systems…or so we thought.

Our decisions whether to rent or to buy at our new stage weren’t based solely on economics. Circumstances played a role as well as the amount of stuff each of us owned. We had to pare down regardless of where we moved. Fewer things of higher quality, yes, but also things that we simply used less often, didn't adore, and took up space in our closets, living rooms, kitchens and other spaces. These things also depleted our paychecks, as well as our psyches. "Should I buy this?" we often debated. We could use that mental time for writing another article or blog or reading to kids, learning to salsa, planning a trip.

But to start shedding and maybe renting rather than buying required readjusting our mindsets. The little voices of our parents were in heads: If you buy, you build up equity. Renting is just throwing money away. Really? we wondered. Was their thinking, perhaps, outdated? At our stage in life and at our somewhat advanced ages, wasn't it more important to clear our lives of responsibility and enjoy artful simplicity? Wasn't it worth a try?

After Margaret sold her home after living there 37 years, she wasn’t sure whether to buy again or rent. She looked at rentals. Many were very nice and filled with amenities of pools, gyms and coffee stations. However, when her mother said she should move into her parents' empty condo in a wonderful area of St. Louis County, MO., she didn’t hesitate to take up the offer. After Margaret’s mother passed away almost two years ago, she bought the property from her siblings. It was a good price, had been her parents’ home for nearly 20 years, and she was already somewhat settled in the apartment and area. She’s not convinced this will be her last home, but for now it offers so many pluses for her current lifestyle.

Barbara, too, was up and down about what to do--almost, like waves on water when it came to where to move and whether to buy or rent after her protracted, expensive divorce. She rented while trying to decide where she wanted to settle after her house sold. After testing several places in the East closer to her family than her Midwest homes where she spent 31 years of her married life, she found the charming and bucolic village of Rhinebeck in Upstate New York, two hours from Manhattan. Now, seven years later, like a romance that finally runs its course, her love affair with her 220-year-old home dating from 1797 has ended or is ebbing. She thinks she’s ready to move on.

She’s debating whether she wants to continue to own a home at all, which—pardon the cliché—has morphed into the all-too-familiar money pit. She loves her village and location, but wants to stop spending on home improvements—whether painting, chasing bats in her attic or groundhogs and deer in her yard, tending plantings that need watering and pruning, and so on to avoid the constant kaching, kaching of dollars going out the windows. Her goal would be to free up her pocketbook so she can travel to see the world and her grandson on a regular basis and to live on one rather than two levels. Part of that would involve finding the right place to settle--a smaller one-level home or condo or even a great rental in a building with lots of fun amenities and any of these choices in a similar charming, walkable town. No big cities anymore for her.

Pat., a widow, sold her beautiful suburban ranch immediately after her spouse died and bought a rundown bungalow her daughter owned in the city. Big mistake. It wasn’t a smart purchase and she realized that in order to sell it and get out, she’d have to do extensive remodeling. More than five years later, she sold the bungalow but not until she bought another small single family home in an upscale burb which for now, is fine. She toyed with the idea of renting, but nothing appealing popped up on the market in an area she wanted that she could afford. She had the money from the sale of the bungalow so figured why not buy something else. Interest rates were low and she was able to get a good loan and the interest on the loan provides a nice tax deduction.

On the other hand, “Lauren,” decided after her second divorce, it was time to rent, more prudent for someone her age—early 60s, and unsure whether she’d stay put. She found a great 1,800 square foot rental in a good area that’s on the top floor of a mid-century duplex and loves the convenience, the freedom, and the lack of maintenance. If something breaks, she calls the landlord and it’s fixed. The ceiling leaked and the owner had to put on a new roof and fix the plaster ceiling. And when she leaves town to visit her kids in other cities, she just closes the door and walks away.

Here's our list; use it to weigh your own decision:

Pros and cons of renting v. buying:

Get a tax deduction on interest from the loan if you buy;

You can do what you want to the property if you buy whether it's a single-family home or a condo--as long as changes in the latter are approved by the condo board;

When it's yours, you can build up equity and you can pass it on to your heirs;

You can rent a house and some condos out on Airbnb or VBRO if you need extra income;

You will likely have more expensive homeowners' insurance to pay if you own than rent;

You will incur property taxes if you own and they can go up, up, up;

You will have closing costs and mortgage insurance to pay if you own;

You will have to share your finances if you buy in a condo or coop building with the board studying every investment, and then you must also provide recommendations and await approval--like joining a club or sorority;

Assessments may go up and sometimes dramatically if you buy in a condo or coop;

If you rent, you just have to get approved and sign a lease;

You may face uncertain finances with renting since rents go up usually yearly, too;

If problems arise in an apartment such as a leaky faucet, the landlord handles and pays for the maintenance;

If you rent, you can use the equity from the house or condo sold in other investments like the now rising stock market;

You're more likely to personalize your surroundings if you own rather than rent since some landlords won't let you paint the dining room red unless you promise to paint it white again when you leave;

At the end of the day, you can simply close the door and go away without worrying about whether leaves or snow piles up if you rent.

No matter what you decide to do, each of us bases the decision after 50 in different ways. Close your eyes and choose what will make you most happy and at home. And remember that nothing has to be forever.